1. ©2004 Prentice Hall20-1 Chapter 20: International Human Resource Management and Labor Relations International Business, 4 th Edition Griffin & Pustay

2. ©2004 Prentice Hall20-2 Chapter Objectives_1  Describe the nature of human resource management in international business  Detail how firms recruit and select managers for international assignments  Explain how international businesses train and develop expatriate managers  Describe labor relations in international business

3. ©2004 Prentice Hall20-3 Chapter Objectives_2  Discuss how international firms conduct performance appraisals and determine compensation for their expatriate managers  Analyze retention and turnover issues in international business  Explain basic human resource issues involving non-managerial employees

4. ©2004 Prentice Hall20-4 Human Resource Management (HRM)  Set of activities directed at attracting, developing, and maintaining the effective workforce necessary to achieve a firm’s objective  Differences in culture, levels of economic development, and legal systems among countries may force changes in HRM systems

5. ©2004 Prentice Hall20-5 Figure 20.1 The International Human Resource Management Process HRM’s Strategic Content Recruitment and Selection Training and Development Performance Appraisal Compensation and Benefits Labor Relations Contribution to Organizational Effectiveness

6. ©2004 Prentice Hall20-6 International Managerial Staffing Needs  Staffing Issues –Recruiting –Training –Retaining  Staffing Categories –Managerial and Executive Employees –Non-managerial Employees

7. ©2004 Prentice Hall20-7 Scope of Internationalization  Size of staffing tasks depends on scope of firm’s international involvement –Export department –International division –Global organization

8. ©2004 Prentice Hall20-8 Centralization versus Decentralization of Control  Centralized firms –Favor home country managers –Most common amongst international division form  Decentralized firms –Favor host country managers –Most common amongst multidomestic firms

9. ©2004 Prentice Hall20-9 Staffing Philosophy  Parent Country Nationals (PCNs)  Host Country Nationals (HCNs)  Third Country Nationals (TCNs)

10. ©2004 Prentice Hall20-10 Strategies for Staffing  Ethnocentric staffing model  Polycentric staffing model  Geocentric staffing model

11. ©2004 Prentice Hall20-11 Figure 20.2 Necessary Skills and Abilities for International Managers Skills and Abilities Necessary to Do The Job Technical Functional Managerial Skills and Abilities Necessary to Work In a Foreign Location Adaptability Location-specific skills Personal characteristics Improved Chances of Succeeding in An International Job Assignment

12. ©2004 Prentice Hall20-12 Recruitment  Experienced Managers  Younger Managers

13. ©2004 Prentice Hall20-13 Selecting expatriates in an important element in international human resource management

14. ©2004 Prentice Hall20-14 Managerial Selection  Managerial competence  Appropriate training  Adaptability to new situations

15. ©2004 Prentice Hall20-15 Table 20.1 Questions from AT&T’s Questionnaire for Screening Overseas Transferees_1  Would your spouse be interrupting a career to accompany you on an international assignment? If so, how do you think this will affect your spouse and your relationship with each other?  Do you enjoy the challenge of making your own way in new situations?  Securing a job upon reentry will be primarily your responsibility. How do you feel about networking and being your own advocate?  How able are you in initiating new social contacts  Can you imagine living without a television?

16. ©2004 Prentice Hall20-16 Table 20.1 Questions from AT&T’s Questionnaire for Screening Overseas Transferees_2  How important is it for you to spend significant amounts of time with people of your own ethnic, racial, religious, and national background?  As you look at your personal history, can you isolate any episodes that indicate a real interest in learning about other peoples and cultures?  Has it been your habit to vacation in foreign countries?  Do you enjoy sampling foreign cuisine?  What is your tolerance for waiting for repairs?

17. ©2004 Prentice Hall20-17 Culture Shock Psychological phenomenon that may lead to feelings of fear, helplessness, irritability, and disorientation

18. ©2004 Prentice Hall20-18 Figure 20.3 Phases in Acculturation Honeymoon Disillusionment Adaptation Biculturalism

19. ©2004 Prentice Hall20-19 Honeymoon Phase  New culture seems exotic and stimulating  Excitement of working in new environment makes employee overestimate ease of adjusting  Lasts for first few days or months

20. ©2004 Prentice Hall20-20 Disillusionment Phase  Differences between new and old environments are blown out of proportion  Challenges of everyday living  Many stay stuck in this phase

21. ©2004 Prentice Hall20-21 Adaptation Phase  Employee begins to understand patterns of new culture  Gains language competence  Adjusts to everyday living

22. ©2004 Prentice Hall20-22 Biculturalism  Anxiety has ended  Employee gains confidence in ability to function productively in new culture  Repatriation may be difficult

23. ©2004 Prentice Hall20-23 Overseas Success  Likelihood of managers being successful at overseas assignment increases if the managers –Can freely choose whether to accept or reject the assignment –Have been given a realistic preview of the job and assignment –Have been given a realistic expectation of what their repatriation assignment will be –Have a mentor back home who will guard their interests and provide support –See a clear link between the expatriate assignment and their long-term career path

24. ©2004 Prentice Hall20-24 Training and Development  Assessing training needs  Basic training methods –Standardized –Customized  Developing younger managers

25. ©2004 Prentice Hall20-25 Performance Appraisal  Process of assessing how effectively people are performing their jobs  Purpose –To provide feedback to individuals about how well they are doing –To provide a basis for rewarding top performers –To identify areas in which additional training and development may be needed –To identify problem areas that may call for a change in assignment

26. ©2004 Prentice Hall20-26 Compensation Packages  Include salary and nonsalary items  Determined by –Labor market forces –Occupational status –Professional licensing requirements –Standards of living –Government regulations –Tax codes

27. ©2004 Prentice Hall20-27 Table 20.2 Annual Cost of Living in Selected Locations Worldwide, 2003 RankCityIndexRankCityIndex 1Tokyo, Japan126.111Shanghai, China98.4 2Moscow, Russia114.512St. Petersburg, Russia97.3 3Osaka, Japan112.213Oslo, Norway92.7 4Hong Kong111.614Hanoi, Vietnam89.5 5Beijing, China105.115Copenhagen, Denmark89.4 6Geneva, Switzerland101.816Ho Chi Minh City, Vietnam 88.5 7London, UK101.317Milan, Italy87.2 8Seoul, South Korea101.018Shenzhen, China86.7 9Zurich, Switzerland100.319Guangzhou, China86.7 10New York City, USA100.020White Plains, NY, USA86.2

28. ©2004 Prentice Hall20-28 Differential Compensation  Cost-of-living allowance  Hardship premium or foreign-service premium  Tax equalization system

29. ©2004 Prentice Hall20-29 Figure 20.5 An Expatriate Balance Sheet U.S. Domestic Base Salary TaxesConsumptionSavings Foreign and Excess U.S. Taxes Paid by company Excess Foreign Costs Paid by company Foreign Service Premium/ Hardship Added by company U.S. Levels U.S. Spendable Income U.S. Hypothetical Housing and Utilities U.S. Auto Purchase U.S. Hypothetical Tax and Social Security

30. ©2004 Prentice Hall20-30 Labor Relations  Labor relations in a host country often reflects laws, culture, social structure, and economic conditions  Union membership may be high

31. ©2004 Prentice Hall20-31 These striking South Korean workers are picketing government offices in Seoul